We were right: Israeli official Professor Shmuel Hauser shares our view on fraudulent ICO and crypto mania
Israel Securities Authority chairman Professor Shmuel Hauser states that binary options fraudsters are moving to cryptocurrency and ICO fraud, highlighting FinanceFeeds’ perspective on this matter. Here is the full insight
Unfortunately, during the course of the past ten years, the previously impeccable reputation as an international business and technological tour de force that the State of Israel has enjoyed since its creation, has been almost decimated by the massively fraudulent binary options business that has emanated from the nation.
Such a vast international criminal activity has been the moot point of regulatory authorities and governments across the world, all pretty much powerless to stop its multi-billion dollar magnitude, and in some cases, due to the pretense by the entire cabal of binary options fraudsters that this is in some way a financial product (which it is not), reputational damage to the genuine electronic trading industry has been significant.
Bearing in mind that binary options fraud, an online crime that the City of London Police has deemed the ‘biggest internet scam in history’ , is almost entirely the problem child of Israeli crime gangs who have absolutely no relationship with or background in the bona fide financial markets industry at all, instead having moved from schemes such as lead stealing/recycling, to online pornography and gambling, and affiliate marketing ruses.
Most of the orchestrators are notoriously aggressive, are loud-and-proud high profile egomaniacs with absolutely no fear of any consequences that may ensue as a result of their duping of millions of unsuspecting people out of money by simply stealing customer deposits and rigging the platforms to ensure that it appears as though they lost, when actually no live market exists whatsoever.
Critics of the binary options crooks are often threatened with physical violence, something that is absolutely alien to the sophsiticated professionals who have forged their careers at top British private schools, toiled at Merrill Lynch or Goldman Sachs under strict internship programs before becoming polished leaders of the electronic trading industry of which we are all proud.
Unfortunately, corruption at the government level within Israel’s Knesset (parliament) including very strong ties between senior government minister David Bitan and some of the executives at SpotOption, the largest perpetrator of binary options activity with the largest number of white label brands, have prevented Israel Securities Authority (ISA) chairman Professor Shmuel Hauser from carrying out his entire ban on the entire industry globally, as reported in detail by FinanceFeeds last month.
Indeed, the bandits will carry on as normal, as the ISA’s plans were stunted by influences from the binary options sector, hence the unusually relaxed nature of the firms behind it as Professor Hauser embarked on his year and a half long attempt to stop binary options.
Crooks of this size never lie down quietly, so their apathy and ambivalence had to be taken seriously.
Whilst Bitcoin and cryptocurrency investment have been around for some time now, they were always the preserve of mavericks and anarchist, and due to the distributed nature of the virtual currency, have never been, and never will be, part of mainstream financial and electronic trading businesses.
Recently, however, the absolute mania that has driven the words ‘crypto’ and ICO (an acronym for Initial Coin Offering) into the forefront of the mind of every twenty year old wet-behind-the-ears intern on low end newsdesks across the world.
Cryptobabble seems to be everywhere, and in many cases, should be avoided.
FinanceFeeds recently made a very clear point about this, highlighting that the ‘cryptobabble’ that now pervades the retail electronic trading arena when it has absolutely nothing whatsoever to do with it, is an insidious dynamic driven primarily by the very same companies that invented and participated in binary options fraud.
This week, Professor Shmuel Hauser has stated that he completely follows our line of thinking.
To emphasize how limited his authority is, Professor Hauser described a media campaign a few years ago in which people opposed to what they considered his strong regulatory hand made ad hominem attacks against him in newspapers, referring to his ex-romantic partners and how unhappy they were with him.
“Someone had written the article falsely using the name of a doctoral student at the University of Haifa. There was nothing I could do about it. I had to go to the police myself.”
Professor Hauser said he is aware of other scams being perpetrated by binary options fraudsters, like “diamond investments” offered by French-speaking salespeople sitting in call centers in Israel, and possible cryptocurrency scams, but in each case, he said, he needs to determine what the ISA’s jurisdiction is and what is the police’s.
Adding to this further, Professor Hauser told journalists in Israel this week that he was “very troubled” by the possibility that binary options fraudsters are now entering the field of cryptocurrencies, where they may be seeking to perpetrate the next big scam.
“We’re very concerned about initial coin offerings and cryptocurrencies,” Hauser said. “We don’t want this to become the next mutation of binary options or a haven for fraudsters.”
An ICO, which stands for Initial Coin Offering, is literally an unregulated means by which funds are raised for a new cryptocurrency venture. An ICO is intended to be used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks.
In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, but usually for Bitcoin.
What that means is that people who have been turned down by experienced investors because they have no product and no capital, are attempting to dupe members of the public to give them money, so that they can use it to pretend to make something that doesn’t exist, paid for by something that doesn’t exist, and exchange legal tender which has a value, for a tender that doesn’t exist in order to fund a company that doesn’t exist, whose core business is around a product that doesn’t exist.
This is a perfect vehicle which binary options fraudsters can adapt the very same binary options platforms and use the same marketing/hard sales model to gain deposits as they did with binary options, except with even less recourse for investors, because, unlike binary options, they cannot make a claim that they were wrongfully sold a trade on a financial instrument, as the item they are investing in does not exist, neither does the currency to buy it – which is known by the investor from the outset, hence the scammers can just simply steal it, and they say that the item never came to fruition and because cryptocurrency is distributed, there is no central system to intervene.
This whole trend, which is really what it is, can be written off as yet another loud PR noise for the Bitcoin proponents, by entities with no commercial value that are attempting to bulk themselves up synthetically so that it, like all of its peers and their founders, can exit and never be seen again.
The information that has been provided is obscure and vague, and is full of superlatives, yet no figures. One has to wonder how long it will be before national governments block the IP addresses of anything relating to ICOs, or if the FBI will do what they did to Lee Elbaz with some of the ICO propagators, many of whom already have a record with the FBI for their previous efforts.
Mind how you go….